Ford And GM's Decision To Abandon Small Cars Is Already Costing Them
11-15-19, 05:51 PM
#1
Lexus Fanatic
Thread Starter
Ford And GM's Decision To Abandon Small Cars Is Already Costing Them
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GM, Ford Sacrifice Loyal Buyers by Abandoning Small Cars, Edmunds Report Reveals
Former Cruze and Focus owners are heading to competitors to find affordable options as the average price of a new vehicle continues to break records
SANTA MONICA, CA — November 13, 2019 — Now that more than a year has passed since Ford and GM announced the strategic decision to end production of several popular small car models, the automotive experts at Edmunds have released a new report detailing how car shoppers are reacting. The analysis revealed that instead of jumping on the SUV bandwagon, 42% of Cruze and Focus owners are choosing to stay in the passenger car segment. So far this year, 23% of Cruze owners and 31% of Focus owners who traded in their car for another car bought from a competitor. Analysts say losing these shoppers to the competition could hurt GM and Ford in the long run because the compact car segment is the largest passenger car segment (accounting for 9.1% of vehicle sales through September of this year) and compact car owners are among the most brand-loyal.
"Ford and GM made a strategic decision to prioritize profit at the expense of market share," said Edmunds Executive Director of Insights Jessica Caldwell. "While this may set them up better in the long run so they have the cash they need to fund electrification and autonomy, there's no question that decision is giving their competitors an edge now."
The brand loyalty of former Cruze and Focus owners has been steadily declining in the last three years. The percentage of Focus owners trading in their vehicle and buying another Ford has declined from 40% in 2016 to 33% through September of this year. The drop in brand loyalty is more pronounced among former Cruze owners: 45% elected to trade in their Cruze for another Chevrolet vehicle so far this year, compared to 57% in 2016.
Many former Cruze and Focus owners are going into direct competitive equivalents such as the Honda Civic and Toyota Corolla, but other brands are proving attractive as well. The number of Focus and Cruze owners trading their vehicles in and buying a small Jeep (Compass or Renegade), Hyundai Kona or Elantra, Kia Forte or Subaru Crosstrek have all risen in the last three years.
However, a decent share of former Cruze and Focus owners are doing exactly what GM and Ford are hoping they do & move into one of their SUVs. So far this year, 21% of Cruze owners who traded in their vehicle bought a Chevrolet SUV, and 18% of Focus owners traded in their car for a Ford SUV. But the buyers who are choosing to move up to an SUV are those with extra cash to spend, as small SUVs can cost between $4,000 and $8,000 more than buying another small car. As the average price of a new car now hovers in record territory, Edmunds analysts note rising costs puts continued pressure on younger and more price-sensitive buyers.
"The catch is, if Ford and GM don't have affordable options for shoppers who are buying their first or second new car, it could be much harder to win them over later," Caldwell noted. "Catching consumers early and keeping them in the family has been a basic tenet of automotive brand strategy for decades. But it feels like we're in the midst of a transformative time for the industry where automakers are being forced to rethink everything. Time will tell if it will end up the right call in the long run."
To read the full report, visit the Edmunds Industry Center.
About Edmunds
Edmunds guides car shoppers online from research to purchase. With in-depth reviews of every new vehicle, shopping tips from an in-house team of experts, plus a wealth of consumer and automotive market insights, Edmunds helps millions of shoppers each month select, price and buy a car with confidence. Regarded as one of America's best workplaces by Fortune and Great Place to Work, Edmunds is based in Santa Monica, California, and has a satellite office in Detroit, Michigan. Follow us onTwitter,Facebook andInstagram.
GM, Ford Sacrifice Loyal Buyers by Abandoning Small Cars, Edmunds Report Reveals
Former Cruze and Focus owners are heading to competitors to find affordable options as the average price of a new vehicle continues to break records
SANTA MONICA, CA — November 13, 2019 — Now that more than a year has passed since Ford and GM announced the strategic decision to end production of several popular small car models, the automotive experts at Edmunds have released a new report detailing how car shoppers are reacting. The analysis revealed that instead of jumping on the SUV bandwagon, 42% of Cruze and Focus owners are choosing to stay in the passenger car segment. So far this year, 23% of Cruze owners and 31% of Focus owners who traded in their car for another car bought from a competitor. Analysts say losing these shoppers to the competition could hurt GM and Ford in the long run because the compact car segment is the largest passenger car segment (accounting for 9.1% of vehicle sales through September of this year) and compact car owners are among the most brand-loyal.
"Ford and GM made a strategic decision to prioritize profit at the expense of market share," said Edmunds Executive Director of Insights Jessica Caldwell. "While this may set them up better in the long run so they have the cash they need to fund electrification and autonomy, there's no question that decision is giving their competitors an edge now."
The brand loyalty of former Cruze and Focus owners has been steadily declining in the last three years. The percentage of Focus owners trading in their vehicle and buying another Ford has declined from 40% in 2016 to 33% through September of this year. The drop in brand loyalty is more pronounced among former Cruze owners: 45% elected to trade in their Cruze for another Chevrolet vehicle so far this year, compared to 57% in 2016.
Many former Cruze and Focus owners are going into direct competitive equivalents such as the Honda Civic and Toyota Corolla, but other brands are proving attractive as well. The number of Focus and Cruze owners trading their vehicles in and buying a small Jeep (Compass or Renegade), Hyundai Kona or Elantra, Kia Forte or Subaru Crosstrek have all risen in the last three years.
However, a decent share of former Cruze and Focus owners are doing exactly what GM and Ford are hoping they do & move into one of their SUVs. So far this year, 21% of Cruze owners who traded in their vehicle bought a Chevrolet SUV, and 18% of Focus owners traded in their car for a Ford SUV. But the buyers who are choosing to move up to an SUV are those with extra cash to spend, as small SUVs can cost between $4,000 and $8,000 more than buying another small car. As the average price of a new car now hovers in record territory, Edmunds analysts note rising costs puts continued pressure on younger and more price-sensitive buyers.
"The catch is, if Ford and GM don't have affordable options for shoppers who are buying their first or second new car, it could be much harder to win them over later," Caldwell noted. "Catching consumers early and keeping them in the family has been a basic tenet of automotive brand strategy for decades. But it feels like we're in the midst of a transformative time for the industry where automakers are being forced to rethink everything. Time will tell if it will end up the right call in the long run."
To read the full report, visit the Edmunds Industry Center.
About Edmunds
Edmunds guides car shoppers online from research to purchase. With in-depth reviews of every new vehicle, shopping tips from an in-house team of experts, plus a wealth of consumer and automotive market insights, Edmunds helps millions of shoppers each month select, price and buy a car with confidence. Regarded as one of America's best workplaces by Fortune and Great Place to Work, Edmunds is based in Santa Monica, California, and has a satellite office in Detroit, Michigan. Follow us onTwitter,Facebook andInstagram.
Last edited by Toys4RJill; 11-16-19 at 05:56 AM.
11-15-19, 06:16 PM
#2
Lexus Fanatic
Ford And GM's Decision To Abandon Small Cars Is Already Costing Them
....and who was told, over and over again, that he didn't know what he was talking about?
11-15-19, 06:19 PM
#3
Lexus Fanatic
Thread Starter
GM Design Boss Says Sedans Could Make A Comeback
General Motors design chief Michael Simcoe has suggested that sedanscould make a comeback down the road.
In recent years, consumer preferences, particularly in the United States, have shifted and buyers are now demanding more crossovers, SUVs, and trucks that ever before. With this change in consumer sentiment, the sedan has started to slowly die out.
Speaking with GM Authority at the recent SEMA Show in Las Vegas, Simcoe acknowledged that “SUVs are king” in the North America but confusion over what defines an SUV, a CUV, and a crossover could see a switch back to sedans.
Also Read: Ford’s US Sales Dip 3.5 Percent Despite Record SUV Deliveries
“I think what you’re seeing is a shift to SUV cues or more formal SUV cues being applied to lower seating positions in vehicles…” he said. “The trouble is, the market is mixing both appearance and content so hard these days, it’s very hard to tell what is a true SUV, versus what is a CUV or generally a crossover vehicle. When hatches and sedans stopped selling, CUVs took their place but I think there will be a cycle [back to sedans] in the industry. And again, then we go back to electrification, which will make people think differently,” he said.
Evidently, GM’s design boss does not share the same disregard for sedans that Ford does following its controversial decision to kill off its traditional car models (excluding the Mustang) a little while back.
According to Simcoe, consumers want to own vehicles that other people will notice.
“They want to park something in their driveway that their neighbors admire. So the reason for purchase is the same as it’s always been. I think we’ll cycle back down to lower vehicles and essentially everything will be on the road.”
https://www.clublexus.com/forums/car...ting-them.html
General Motors design chief Michael Simcoe has suggested that sedanscould make a comeback down the road.
In recent years, consumer preferences, particularly in the United States, have shifted and buyers are now demanding more crossovers, SUVs, and trucks that ever before. With this change in consumer sentiment, the sedan has started to slowly die out.
Speaking with GM Authority at the recent SEMA Show in Las Vegas, Simcoe acknowledged that “SUVs are king” in the North America but confusion over what defines an SUV, a CUV, and a crossover could see a switch back to sedans.
Also Read: Ford’s US Sales Dip 3.5 Percent Despite Record SUV Deliveries
“I think what you’re seeing is a shift to SUV cues or more formal SUV cues being applied to lower seating positions in vehicles…” he said. “The trouble is, the market is mixing both appearance and content so hard these days, it’s very hard to tell what is a true SUV, versus what is a CUV or generally a crossover vehicle. When hatches and sedans stopped selling, CUVs took their place but I think there will be a cycle [back to sedans] in the industry. And again, then we go back to electrification, which will make people think differently,” he said.
Evidently, GM’s design boss does not share the same disregard for sedans that Ford does following its controversial decision to kill off its traditional car models (excluding the Mustang) a little while back.
According to Simcoe, consumers want to own vehicles that other people will notice.
“They want to park something in their driveway that their neighbors admire. So the reason for purchase is the same as it’s always been. I think we’ll cycle back down to lower vehicles and essentially everything will be on the road.”
https://www.clublexus.com/forums/car...ting-them.html
11-15-19, 06:28 PM
#4
Lexus Fanatic
General Motors design chief Michael Simcoe has suggested that sedans could make a comeback down the road.
Evidently, GM’s design boss does not share the same disregard for sedans that Ford does following its controversial decision to kill off its traditional car models (excluding the Mustang) a little while back.
11-16-19, 05:59 AM
#7
Lexus Fanatic
Thread Starter
Termination of GM sedans was done to facilitate the closure of the sedan producing plants in the US and Canada. GM will likely just import sedans from China, or Mexico in the future. The Cruze hatch was also Made in Mexico
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11-16-19, 06:08 AM
#8
Lexus Fanatic
Thread Starter
Hyundai and Kia have gained some recent tradein traction with small SUVs of their own, and over index with trade-ins of Focus and Cruzes from older model years.
Honda and Toyota, the perennial compact-car segment leaders, have seen the largest increases and are bolstered by Focus and Cruze owners moving into their subcompact and compact SUVs.
Honda and Toyota, the perennial compact-car segment leaders, have seen the largest increases and are bolstered by Focus and Cruze owners moving into their subcompact and compact SUVs.
Ignoring broad market bases isn’t without its risks. The trade-in data of these compacts reveals that not all car owners see SUVs as a viable landing spot. Indeed SUVs, while still gaining in market share, aren’t growing in sales at nearly the pace they did over the past few years. In fact, market share for SUVs has hit a plateau in the first nine months of 2019, with only 1% growth over the same time period last year
Edmunds strange conclusion below:
In this way the Ford Ranger provides an interesting parallel. When Ford pulled out of the midsize truck market in 2012, the segment was dwindling and the Ranger was nixed with the F-150 left to pick up the pieces. In 2019 the Ranger reentered a resurgent midsize truck segment but hasn’t been able to command the share of the segment it once did, now slotting far behind the nameplates that stuck around. Still, this has always been a story about profitability, and the new Ranger commands a 49% higher price than it did the last time it was on sale — a trick that might not be in the cards for the economy-minded compact car segment.
Last edited by Toys4RJill; 11-16-19 at 06:11 AM.
11-16-19, 07:47 AM
#9
Lexus Fanatic
11-16-19, 07:50 AM
#10
Lexus Fanatic
In this way the Ford Ranger provides an interesting parallel. When Ford pulled out of the midsize truck market in 2012, the segment was dwindling and the Ranger was nixed with the F-150 left to pick up the pieces. In 2019 the Ranger reentered a resurgent midsize truck segment but hasn’t been able to command the share of the segment it once did, now slotting far behind the nameplates that stuck around. Still, this has always been a story about profitability, and the new Ranger commands a 49% higher price than it did the last time it was on sale — a trick that might not be in the cards for the economy-minded compact car segment.
11-16-19, 04:03 PM
#11
Lexus Fanatic
Here's an article from Car and Driver on the same subject. It is close enough to the original topic that I'll just post it here.....no need to start a new thread.
https://www.caranddriver.com/news/a2...-compact-cars/
By JOEY CAPPARELLA
NOV 14, 2019
Chevrolet, Ford
The data also shows that competitors such as Toyota and Honda are gaining from Ford and Chevy's loss. Because the compact-car segment still makes up a significant 9.1 percent of all new-vehicle sales this year, Focus and Cruze buyers are trading in for competitor models including the Honda Civic and Toyota Corolla at higher rates. Both the Civic and Corolla are increasingly being bought by customers trading in a Focus or Cruze. Through October 2019, Honda reported Civic sales up 0.6 percent and Toyota reported Corolla sales down 0.3 percent.
To be fair, Ford and Chevy's crossover offerings including the Equinox, Trax, Escape, and EcoSport are also benefiting from the discontinuation of the Cruze and Focus. More people are trading in their Focuses and Cruzes for these small crossovers than before. While this may be better for these companies' bottom lines, as these SUVs generally cost more than the compacts they effectively replace, it's a loss for consumers looking for affordable new cars. The Chevy Equinox's base price is $6125 higher than the Cruze's, and the 2020 Ford Escape's base price is $7255 higher than the Focus's, although it's tough to make a direct comparison because 2018 was the last model year for the Focus.
Edmunds also states that even buyers trading in Focuses and Cruzes for small SUVs are defecting to Honda, Toyota, Hyundai, and Kia in increasing numbers. The report also predicts that brand loyalty will likely decline even more in the future as more Ford and Chevy small-car owners search for replacements for their vehicle.
https://www.caranddriver.com/news/a2...-compact-cars/
Ford and Chevy Are Losing Buyers after Discontinuing Compact Cars: Report
Many current Cruze and Focus drivers are trading for Escapes and Equinoxes, but also Civics and Corollas.
NOV 14, 2019
Chevrolet, Ford- A new report from Edmunds.com shows a decline in brand loyalty since Fordand Chevy ended production of the Focus and Cruze compact cars.
- Fewer Focus and Cruze drivers are trading in their vehicles for new Ford and Chevy models in 2019 compared to 2016.
- The Ford Escape and Chevy Equinox crossovers are among the top vehicles that owners trade in Focus and Cruze for. So are competitors such as the Honda Civic and Toyota Corolla.
The data also shows that competitors such as Toyota and Honda are gaining from Ford and Chevy's loss. Because the compact-car segment still makes up a significant 9.1 percent of all new-vehicle sales this year, Focus and Cruze buyers are trading in for competitor models including the Honda Civic and Toyota Corolla at higher rates. Both the Civic and Corolla are increasingly being bought by customers trading in a Focus or Cruze. Through October 2019, Honda reported Civic sales up 0.6 percent and Toyota reported Corolla sales down 0.3 percent.
Edmunds also states that even buyers trading in Focuses and Cruzes for small SUVs are defecting to Honda, Toyota, Hyundai, and Kia in increasing numbers. The report also predicts that brand loyalty will likely decline even more in the future as more Ford and Chevy small-car owners search for replacements for their vehicle.
11-16-19, 04:20 PM
#12
Lexus Champion
For another POV US News ranks the Ranger #2 in the segment using their sources. The rankings as they see it are 1. Ridgeline 2. Ranger 3. Canyon 4. Colorado 5. Tacoma. All subject to debate of course.
11-16-19, 05:42 PM
#13
Lexus Fanatic
Yes, I've seen several different reviews/comparisons for smaller trucks, and they come up with different conclusions. I base my opinion on my own observations and test-drives. Except for a somewhat stiff ride, I found the Colorado/Canyon the best of the smaller trucks I've sampled.
11-16-19, 05:47 PM
#14
Lexus Fanatic
Thread Starter
I agree, despite some cheap interior materials, they are the most appealing. The GM trucks are better (I think). Ranger is good too, I just find the Ranger not as appealing
Last edited by Toys4RJill; 11-16-19 at 07:00 PM.
11-17-19, 03:07 AM
#15
Lexus Fanatic
The GM trucks have the best interior materials and exterior sheet metal, though it's hard to beat the durability of the Toyota Tacoma's drivetrain and chassis. The Ranger and Nissan Frontier fall somewhere in between. And the Ridgeline has the best fit/finish and is the most pleasant to drive.